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Tag Archive for IRS Gift Tax

Don’t Look A Gift Horse In The Mouth: All About Gifts And Taxes

It’s the proverbial time of the year when there are a lot of gifts exchanged. Some are store bought, some gift cards & there are those who just get plain ol’ cash.

What constitutes a “gift” in the eyes of the IRS?

• You make a gift if you give property, including money, or the use of or income from property, without expecting anything of equal value in return.
• You also make a gift if you sell something at less than its full value
• There’s a gift made if you give an interest-free loan or reduced interest loan Read more

Desperate For Your Money – IRS Gift Tax Audits On The Rise

TaxConnections Blog PostThe IRS has been embarking on a new initiative: Track down and catch US Gift Tax evaders who have transferred real property to family members any time since 2005 without paying Gift Taxes owed. The IRS estimates that between 60% and 90% of taxpayers that transfer real property to family members fail to file and pay Gift Tax. In an attempt to raise desperately needed funds for the US Treasury, IRS started its Gift Tax compliance program in earnest by using the increasingly more popular tax enforcement tool called the “John Doe” summons.

Use of the John Doe Summons

When the IRS issues a “John Doe” summons to a party (most of us are now very familiar with this powerful tool due to the robust enforcement actions against the Swiss banking industry) it essentially compels that party to produce information requested by the IRS. The summons does not identify the persons with respect to whose tax liability it is issued since the IRS would not have the taxpayers’ names. In the Gift Tax Compliance Program, the IRS has been issuing John Doe summonses to State property tax authorities or State real property title offices. The summons typically requests identification of transferors of real property who did not charge the recipient at all or only charged a nominal price. Typically these are gifts of real property made between family members and in the usual case, Gift Tax was never paid on the transfer. Read more